Lawmakers Cite Technology as Key to Economic Recovery

April 22, 2009 (202) 226-3636

Committee on Small Business

Lawmakers Cite Technology as Key to Economic Recovery

Discuss Reauthorization of Small Business Research Program

WASHINGTON, D.C. - The nation's economic recovery and a resumption of steady job growth will require continued advances in technology and innovation, Members of Congress heard today during a House Small Business Committee hearing. As the nation continues struggling with economic recession, entrepreneurs and representatives from government agencies described how small firms are engaged in the scientific research that can create new products and spur job growth.

"Small businesses continue to be leaders in innovation and the development of new products," said Committee Chairwoman Nydia M. Velázquez (D-NY). "We need to promote policies that support this kind of growth and development, so that small firms keep generating the new ideas that create new jobs."

As one of the programs that has been central to small business' participation in the high-tech field, much of Wednesday's hearing focused on needed changes to the Small Business Innovation Research (SBIR) program. Coordinated by the Small Business Administration (SBA), the Small Business Innovation Research program ensures that a small percentage of federal agencies' research budgets, about 2.5%, is reserved for contracts or grants to small firms. Witnesses at today's hearing said SBIR programs in eleven federal agencies have generated more than 84,000 patents and millions of jobs. Federal officials testifying before the Committee credited the program with advances in state of the art lithium ion batteries for hybrid engine technology, life-saving therapies and drugs, and game-changing defense systems like predatory drones, which have been utilized in both Iraq and Afghanistan.

"Over the past twenty years, the SBIR has helped spur new ideas, supported innovation and fostered small business growth," said Velázquez. "Even with this success, the SBIR is not keeping pace with many of our most promising entrepreneurs and the program will need to be modernized to maximize its job creating potential."

During the hearing, Members of Congress and witnesses touched on a number of ways to improve the SBIR program. Part of the discussion focused on the need to ensure that more recipients of SBIR funding produce technological advances that are commercialized and brought to market. In addition, given the difficulty that small firms and businesses encounter in acquiring capital, the hearing explored what role venture capital should be allowed to play for SBIR funding recipients.

"In this economic climate, small firms need all the help they can get raising capital," said Velázquez. "Withholding SBIR funds from firms that accept venture capital penalizes a whole class of small businesses that are doing promising work and contributing to our economic recovery."

Eight years have passed since the SBIR initiative was reauthorized by Congress and, although the House Small Business Committee passed legislation in the previous Congress to modernize SBIR, the Senate did not pass the bill. In March, Congress temporarily extended SBIR until the end of July.

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Click here to view video of the hearing.